They're the little plastic cards that have rescued countless gift givers from hours spent wandering mall corridors in search of the perfect present.
But for all their perks, gift cards are getting a second look from many consumers worried that store bankruptcies could render the cards worthless.
That concern is expected to result in a drop in sales of gift cards this year, according to U.S.-based research firm TowerGroup.
"A lot of people are cautious this year about putting money into retailers directly," said Brian Riley, research director at TowerGroup.
Mr. Riley said gift card sales are typically strongest at the end of the year, and while that's still far off, there are many signs that consumers are losing faith in purchasing them.
A string of recent Canadian store closings or bankruptcy announcements from chains such as Source by Circuit City, Linens 'N Things and the Ontario locations of Outback Steakhouse Canada has led to widespread confusion over card redemption and worry that their value could disappear.
At Source by Circuit City's nearly 800 Canadian locations, customers were assured they could still redeem and purchase gift cards after the U.S. parent company filed for creditor protection last year. (Bell Canada announced last month it has struck a deal to acquire the Source stores in Canada.)
But Linens 'N Things now operates as an online-only store that doesn't accept gift cards purchased before Feb. 15, 2009.
Customers with gift cards to Outback restaurants will be able to use them at chains operated by SIR Corp., including Jack Astor's and Canyon Creek.
Worry over possible bankruptcies helped propel false information about Best Buy Canada into a viral e-mail that crossed the nation. Many Canadians received a message that Best Buy stores were under bankruptcy protection and that gift cards wouldn't be honoured. The information was untrue, but created uncertainty among consumers.
"There was some confusion," said Heather Seabrook, spokeswoman for Best Buy Canada. "These are very challenging situations."
Store closings and rumours of bankruptcy are prompting consumer advocates to warn Canadians against buying gift cards, period.
"We're getting a lot of calls from people that have gift cards from bankrupt companies," said Bruce Cran, president of the Consumers' Association of Canada. "Give cash or give people a present."
Many consumer experts are wary of gift cards at the best of times because some have expiry dates, and a good chunk go unused by the recipient. With the current economic crisis, consumers can't be sure retailers or restaurants have a long-term future, which should prompt them to seriously question the worth of gift cards, Mr. Cran said. "I think it's a worse idea than ever, to be perfectly honest."
There are clear signs that some Canadians are starting to get that message. Every day, dozens of new posts pop up on websites such as Craigslist and Kijiji from people looking to exchange their gift cards for cold, hard cash.
And new sites catering to the gift card crowd have also begun to appear, first in the United States and now in Canada. On Buygiftcard.ca and Giftah.com, consumers can buy, sell or trade unused gift cards. In some cases, the economic downturn is propelling Canadians to use the sites to find much-needed cash.
"We've seen a lot of people sell their gift cards just to pay their bills," said Rezart Bajraktari, co-founder of Giftah.com, where users often post explanations for why they're selling their cards. "I would say starting in March it has picked up way more. That's when we actually started seeing descriptions saying, 'I need to sell my card to pay my rent.' "
One of the dangers with swapping or selling gift cards online is fraud. Some people try to sell cards that turn out to be worthless, so consumers should approach such transactions with caution.
Sites such as Giftah have tried to address those fears by verifying gift card serial numbers before posting them to ensure they're the real deal.
The site, which has been operating for a few months, had more than 700 gift cards on sale last month, Mr. Bajraktari said.
"It's actually picked up a lot more," he said. "We had no idea that people would actually be interested in using gift cards to pay their bills."
